ARTICLE
8 July 2025

US Court Denies Fire Loss Claim Due To Noncompliance With "Duties After Loss" Provision

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Adams & Adams

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Adams & Adams is an internationally recognised and leading African law firm that specialises in providing intellectual property and commercial services.
A recent judgement by the United States District Court for the District of Connecticut offers important guidance for both policyholders and insurers on the significance of adhering to post-loss obligations...
United States Insurance

A recent judgement by the United States District Court for the District of Connecticut offers important guidance for both policyholders and insurers on the significance of adhering to post-loss obligations under an insurance policy.

Factual Background

In this matter, the insured acquired a residential property and arranged property insurance. Shortly after the policy commenced, the property suffered fire damage under circumstances that aroused suspicion. The insurer identified several warning signs, including a history of multiple fire-related claims, a failed electrical inspection prior to the fire, and evidence of unauthorised occupation in the attic of the property. Consequently, the insurer launched a comprehensive investigation and requested a range of documents from the insured, such as financial records and details of any property improvements.

Despite repeated requests over an extended period, the insured failed to provide most of the required documents, submitting only a limited selection through a public adjuster. The insurer, citing the insured's lack of cooperation and incomplete disclosure, ultimately rejected the claim. The insured, acting without legal representation, instituted proceedings for breach of contract. The insurer responded with an application for summary judgement, contending that the insured's noncompliance with the policy's "Duties After Loss" clause was both material and prejudicial.

Policy Provisions and Legal Principles

The insurance policy included a standard "Duties After Loss" provision, obliging the insured to cooperate fully with the insurer's investigation, provide access to relevant documents, and submit to examinations under oath if requested. Crucially, the policy stipulated that failure to comply with these duties, where such failure prejudices the insurer, would relieve the insurer of liability.

The court found that the insured had received and acknowledged the insurer's requests but had not provided the necessary documentation, including complete bank statements, credit card records, and tax returns. This noncompliance was deemed both substantial and material, as it significantly hindered the insurer's ability to properly investigate the claim, particularly in relation to potential financial motives and the possibility of arson.

Judgment and Implications

The court granted summary judgement in favour of the insurer, holding that the insured's failure to comply with post-loss obligations had prejudiced the insurer's investigation and justified the rejection of the claim. The court emphasised that the insured's cooperation is not a mere procedural formality but a fundamental condition precedent to the insurer's liability.

Key Takeaways for Policyholders

  • Policyholders must strictly adhere to all post-loss obligations set out in their insurance policies, including the prompt and complete provision of requested documents and information.
  • Failure to cooperate with an insurer's investigation can result in the rejection of a claim, regardless of its underlying merits.
  • Policyholders should ensure they are familiar with the specific duties imposed by their policies and seek assistance if they are uncertain about their obligations.

Key Takeaways for Insurers

  • Insurers should ensure that requests for information are clear, specific, and well-documented, and that policyholders are made aware of the consequences of noncompliance.
  • Depending on the wording of the "Duties After Loss" provision, insurers may need to demonstrate that the noncompliance caused actual prejudice to their ability to investigate or assess the claim.
  • Insurers should provide policyholders with reasonable opportunities to comply and should document all efforts to obtain cooperation before rejecting a claim.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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